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Atria Convergence to buy out promoters of Beam Telecom; raises Rs 1.4 bn debt

MUMBAI: India Value Fund Advisors-controlled Atria Convergence Technologies (ACT), a leading broadband and cable TV access provider, is in the process of acquiring its joint venture partners in Beam Telecom to take complete control of its subsidiary.

The promoters of Beam Telecom hold a 39.70 per cent stake in the Hyderabad-based broadband company.

Bengaluru-based ACT has raised $23 million ( Rs 140 crore) of debt to fund the stake acquisition. The balance amount of the secured non-convertible debentures (NCD) issue will be used as capital expenditure for expansion of the broadband business and digitisation of its cable TV network.

Bala“We have secured NCD with a tenor of 4.5 years. We will be using 60 per cent of the debt raised for broadband, including the stake acquisition. The balance 40 per cent will be invested in digitising our network,” ACT CEO Bala Malladi told TelevisionPost.com.

ACT has received structured debt financing from Olympus Capital Asia Credit (OCA Credit) and Kilimanjaro Netherlands BV, a subsidiary of Kilimanjaro Credit Fund, LP (Kilimanjaro).

The transaction marks the first investment by OCA Credit and Kilimanjaro in India. Avendus Capital was the sole financial advisor to ACT for this transaction.

IVFA holds over 70 per cent stake in ACT while the rest is with CS Sunder Raju and K Nagaraju. ACT is among the Top-5 ISPs in India (excluding mobile internet access providers) and operates in the states of Karnataka, Andhra Pradesh and Tamil Nadu.

“The focus this year will be on expanding our broadband business in Bengaluru, Hyderabad and Chennai. We will also be laying emphasis on digitising our cable TV network in Andhra Pradesh,” said Malladi.

ACT expects to have 0.8–1 million digital subscribers by the end of Phase III of digitisation, Malladi added.

ACT has cable TV operations in Karnataka and Andhra Pradesh. It has broadband operations in Bengaluru, Hyderabad, Chennai and pockets of Andhra Pradesh.

“Our broadband packages range between Rs 600 and 1,200. We are adding 20,000 broadband subscribers every month. We use the fibre-to-the-home technology. We have about 430,000 broadband subscribers,” Malladi said.

The broadband business contributes over 70 per cent of ACT’s total revenue. The company has projected income of over 80 per cent from the broadband business in the coming years.

ACT expects to break even in FY15. On the basis of provisional financial results, ACT’s sales has increased over 56 per cent to Rs 293 crore ( Rs 2.93 billion) in FY13, from Rs 188 crore ( Rs 1.88 billion) in FY12. Net loss (provisional) narrowed at Rs 22.49 crore ( Rs 225 million), from Rs 32.83 crore ( Rs 328.3 million) a year ago. The company’s tangible net worth is Rs 142.48 crore ( Rs 1.42 billion) as on 31 March 2013, which includes share application of Rs 203 crore ( Rs 2.03 billion).

The Atria Group, headed by Raju, has business interests in hospitality, real estate, power and information technology.